The income attached to
the residents of a country, from current economic
activity, during a specific period
National Income
Transfer Payments
Payments for which no factor of
production is provided
Income received in non-monetary
form
Benefit-In-Kind
Net Factor Income
The difference between income earned by
foreigners in Ireland & income earned by Irish
nationals abroad
LC Macro-Economics – Key Definitions
Notes how earnings
and spending flows between firms &
households
Circular Flow of Income
Closed Economy
An economy where there are no imports
or exports
An economy which takes part in global trade
Open Economy
The Multiplier
The relationship between an injection into the economy & the total increase in national
income
LC Macro-Economics – Key Definitions
An increase in savings by individuals can result in a fall in national savings
Paradox of Thrift
Inflation The constant
increase in the general level of
prices
A reduction in the general
level of prices Deflation
Demand Pull Inflation
When demand is continuously greater than supply, causing
prices to rise
LC Macro-Economics – Key Definitions
Occurs when a continuous rise in production costs
causes prices to rise
Cost Push Inflation
Tariff Tax on imports of a
particular good, making it less
attractive to buy
A limit on the quantity of a good
that can be imported
Quota
Embargo A ban on the import of a
particular good
LC Macro-Economics – Key Definitions
A country should specialise in the production of goods in which it is most efficient
& trade for its other requirements
Law of Comparative Advantage
Terms of Trade
A country’s ratio of its export prices to
its import prices
Difference between visible exports & visible imports
Balance of Trade
Balance of Invisible
Trade
Difference between invisible exports & invisible imports
LC Macro-Economics – Key Definitions
Difference between
capital exports & capital imports
Balance on Capital A/C
Devaluation A deliberate
decrease in the value of a currency
A plan of estimated government income &
expenditure for the year
Current Budget
Budget Deficit
Current expenditure > current income
LC Macro-Economics – Key Definitions
Current income > current
expenditure
Budget Surplus
Neutral Budget
Current expenditure =
current income
The use of government spending & tax to
influence economic growth
Fiscal Policy
National Debt
The value of outstanding debt
by the state
LC Macro-Economics – Key Definitions
Government borrowing to fund a budget deficit & any borrowing for capital
purposes
Exchequer Borrowing
Requirement
Public Sector Borrowing
Requirement
The exchequer borrowing requirement + borrowing for semi state
firms
Equity, certainty, convenience &
economy
Canons of Taxation
Automatic Stabiliser
Take more money out of the economy during booms & less out of the economy
during recessions
LC Macro-Economics – Key Definitions
Taxes on income, collected straight from the taxpayer. Can’t be
avoided
Direct Tax
Indirect Tax Taxes on spending, collected through
intermediaries. Can be avoided
Tax that increases proportionally with a
person’s income
Progressive Tax
Regressive Tax
Takes a higher % of tax from low income
taxpayers than from high income taxpayers
LC Macro-Economics – Key Definitions
Legal methods of reducing tax
Tax Avoidance
Tax Evasion Illegal methods of reducing tax
All economic activity that goes unrecorded in the National Income
figures
Black Economy
Imposition/ Impact of Tax
Refers to the person on whom the tax
was initially charged
LC Macro-Economics – Key Definitions
Refers to the person who ends up paying the tax
Incidence of Tax
Absolute Advantage
When one country can make more of a good using fewer factors of
production than another country
When a country can make a good at a lower opportunity cost, than
another country
Comparative Advantage
Privatisation The partial or whole
selling of a state-owned asset to the
private sector
LC Macro-Economics – Key Definitions
The price of one currency expressed in terms of another
currency
Exchange Rate
Economic Development
An increase in the GNP per person with
a change in the structure of society
Occurs when disadvantaged areas are
identified & policies created in favour of these
regions
Balanced Regional Development
Economic Growth
An increase in the GNP per head without
changes in the structure of society
LC Macro-Economics – Key Definitions
LC {INSERT SUBJECT HERE} – Key Definitions
Increasing the number of people
in the tax net
Broaden the Tax Base
Nationalisation Taking assets into public ownership by a government
Actions by the ECB, which influence the money
supply, interest rates & the availability of credit
Monetary Policy
LC Macro-Economics – Key Definitions